The fall in trade union membership has contributed to a massive rise in pay inequality, according to a new report.

The Institute for Public Policy Research (IPPR) said that as the number of workers in unions has reduced, a higher share of income has gone to the top 1% of earners.

As union membership has declined since 1979 - the year Margaret Thatcher came to power - inequality has risen to levels not seen for nearly a century, said the think tank.

Its research also found that countries that have higher rates of collective bargaining have lower levels of inequality; and pay inequality is less in firms where there is a trade union present.

Joe Dromey, senior research fellow at the IPPR, said: "In recent years, we have seen trade union membership fall by half, and collective bargaining coverage fall by two thirds.

"At the same time, we have seen inequality rocket. Over the last four decades, the share of income going to the top 1% has nearly tripled.

"Inequality is the scourge of modern times. If we want to tackle inequality - and if we want to improve productivity, pay and job quality - then we need stronger unions and a renaissance in collective bargaining."